EU, ECB working on Greece exit plans

2012-05-18 14:07

Reuters

Brussels - The European Commission (EC) and the European
Central Bank (ECB) are working on an emergency scenario in case Greece has to
leave the eurozone, EU trade commissioner Karel De Gucht said in an interview
published on Friday.

The comments would appear to be the first time that an EU
official has confirmed the existence of contingencies being taken for a
possible Greek exit from the currency bloc. Speculation has been rife about
such plans, but their existence has not been confirmed.

"A year-and- a-half ago there may have been the danger
of a domino effect," he said in an interview with the Belgium's
Dutch-language newspaper De Standaard.

"But today there are, both within the European Central
Bank and the European Commission, services that are working on emergency
scenarios in case Greece doesn't make it."

He added: "A Greek exit does not mean the end of the
euro, as some claim."”

The source close to De Gucht said the commissioner was
explaining that EU institutions had not been sitting on their hands for the
past two years, and that they were now better prepared than they had been.

Concern has grown that Greece may decide to leave or be
forced out of the 17-country currency bloc after a rise in popular opposition
to an EU-International Monetary Fund programme of fiscal austerity and
structural reforms undermined attempts to form a government after May 6
elections.

Greeks are scheduled to go the polls again on June 17.

A victory by the far-left, anti-bailout coalition SYRIZA -
which some opinion polls suggest is likely - would increase the possibility of
the country leaving the euro.

However, one opinion poll on Thursday showed the pro-bailout
New Democracy party in first place, several points ahead of the SYRIZA, which
has pledged to tear up the bailout agreement.

The prospect of SYRIZA winning the election has sent the
euro and markets across the continent tumbling this week.

Earlier this week, the country's president said Greeks had
withdrawn up to €800m from banks as the political uncertainty deepened.

In a further blow, the ECB said it had halted liquidity
operations with some Greek banks because their capital was too depleted.

De Gucht told De Standaard he thought Greece would stay
inside the eurozone, but that the crucial question until the next election was
what conditions the ECB would set for guaranteeing the liquidity of Greek
banks.

"The endgame has begun, and how it will finish I do not
know," he said. "The question is, can everyone maintain their
sangfroid over the coming weeks."

Asked earlier this week about any contingency planning for a
Greek exit, the spokesperson for the EC replied: "There are many, many
questions arising and many questions open about Greece and most answers have to
come from Greece and we have to respect the ongoing political process.

"Clearly, the future of Greece is in the eurozone. We
are working on that."

Comments

Faizie
-
2012-05-19 06:15

Beware Greeks bearing gifts. we should just invade this place and put in a ANC government to sort this out

Freddy
-
2012-05-19 18:30

The problem still lies with the USA. They started all this some years ago.